Armelin v. Government Employees Insurance Co.

United States District Court, E.D. Louisiana

May 1, 2018

SASHA ARMELINv.GOVERNMENT EMPLOYEES INSURANCE COMPANY

SECTION:
“G” (3)

ORDER

NANNETTE JOLIVETTE BROWN UNITED STATES DISTRICT JUDGE

Pending
before the Court is Defendant Government Employees Insurance
Company's (“GEICO”) “Motion for Summary
Judgment or, Alternatively, Partial Summary
Judgment.”[1]GEICO alleges that Plaintiff Sasha Armelin
(“Plaintiff”) is not entitled to recover for her
uninsured/underinsured motorist (“UM”) claim
because Plaintiff executed a
“Release.”[2] Having considered the motion, the
memoranda in support and in opposition, the record, and the
applicable law, the Court will grant the motion to the extent
that GEICO seeks the dismissal of Plaintiff's claim that
GEICO acted in bad faith, but deny the motion to the extent
that GEICO requests the dismissal of Plaintiff's UM
claim.

I.
Background

On or
about May 23, 2016, Plaintiff alleges she was in an
automobile collision with Andrew Barback in
Louisiana.[3] Plaintiff contends that Andrew Barback was
at fault and was issued a citation for careless operation of
a motor vehicle.[4] Plaintiff alleges that GEICO had
previously issued her parents a UM policy, which covered
Plaintiff and her vehicle at the time of the
accident.[5]On April 11, 2017, Plaintiff executed a
“Release, ” which discharged Andrew and David
Barback, as well as State Farm Insurance Company, from
liability resulting from the accident. Because of the
Release, GEICO alleges that Plaintiff is not entitled to
recover damages under the UM policy.[6]

On
April 26, 2017, Plaintiff filed suit in the 23rd Judicial
District Court for the Parish of St. James.[7] On May 17, 2017,
GEICO removed the case to this Court.[8] On February 5, 2018, GEICO
filed the instant motion for summary judgment.[9] GEICO's
motion for summary judgment was set for submission on March
14, 2018. Pursuant to Local Rule 7.5, Plaintiff's
opposition was due by March 9, 2018. Plaintiff did not file
an opposition to GEICO's motion until March 15,
2018.[10] Therefore, the opposition was not timely
filed.

On
March 16, 2018, GEICO filed a motion to strike
Plaintiff's opposition, arguing that the opposition
should not be considered because it was not timely
filed.[11] The same day, Plaintiff also filed a
motion for leave to file its opposition, asserting that the
opposition was not timely filed due to a clerical
error.[12] On March 19, 2018, GEICO filed an
opposition to Plaintiff's motion for leave to
file.[13] The Court has broad discretion as to
whether to consider untimely filings.[14] Accordingly,
the Court will consider the untimely opposition to the motion
for summary judgment, grant Plaintiff's motion for leave
to file, and deny the motion to strike.

II.
Parties' Arguments

A.
GEICO's Arguments in Support of the Motion for Summary
Judgment

In the
motion, GEICO asserts that Georgia law governs this dispute
because a “choice of law” provision contained in
Plaintiff's insurance policy requires the application of
Georgia law, which would require dismissal of Plaintiff's
claims.[15] GEICO contends that the choice of law
provision is presumed valid under Louisiana
law.[16] GEICO also points to a Fifth Circuit
decision, which GEICO asserts held that an insurance
contract's choice of law provision is enforceable under
Louisiana's conflict of law statutes.[17]

Alternatively,
GEICO argues that even if the policy's choice of law
provision is found to be invalid, Georgia law would still
apply because Georgia's policies “would be most
seriously impaired if its law were not
applied.”[18] Relying on the factors laid out in
Louisiana Civil Code article 3537, [19] regarding conflicts of
law of conventional obligations, GEICO asserts that Plaintiff
has significant contacts to Georgia and that the GEICO policy
“was a Georgia contract, negotiated and issued in
Georgia, insuring Georgia named insureds and Georgia
vehicles.”[20] GEICO contends that this case is similar
to Abraham v. State Farm Mutual Automobile Insurance
Co., where the Fifth Circuit held that Mississippi law
applied to an accident that occurred in
Louisiana.[21] There, the plaintiff was a dual resident
of Mississippi and Louisiana who held a Mississippi insurance
policy for a vehicle registered in Mississippi.[22] Therefore,
GEICO argues that Georgia law is applicable
here.[23]

According
to GEICO, under Georgia law, an insurance company's
liability for UM coverage derives from the tortfeasors'
liability, and “[o]nce the plaintiff released all
claims against the tortfeasor, there is no basis of liability
on which the defendant insurance company can be held
responsible under the terms of the
policy.”[24] GEICO asserts that Plaintiff executed a
complete release of Andrew and David Barback “with only
a reservation of rights as to uninsured/underinsured motorist
coverage.”[25] Therefore, GEICO argues that because
Plaintiff executed a complete release of the Barbacks, GEICO
contends it is entitled to summary judgment.[26]

Last,
GEICO asserts that GEICO cannot be held in bad faith for
denying Plaintiff's claim under her policy because
Plaintiff's complete release of the tortfeasors
constitutes “a reasonable basis to defend the
claim.”[27]

B.
Plaintiff's Opposition to GEICO's
Motion

In
opposition, Plaintiff argues that the contractual choice of
law provision cited by GEICO is not applicable and that the
Court should conduct its conflicts of law analysis by turning
to Louisiana Civil Code Article 3542, which governs conflicts
of law for delictual and quasi-delictual
obligations.[28] Considering the first factor, which
looks to the contacts of each state to the parties and events
that give rise to the tort, Plaintiff asserts that Louisiana
has more substantial contacts to the dispute than Georgia
because the car accident occurred in Louisiana and Plaintiff
was living in Louisiana at the time of the
accident.[29] Plaintiff also avers that Georgia's
only contact to the dispute is the insurance policy's
choice of law provision and that Plaintiff was not involved
in the procurement of the policy.[30]

Moreover,
Plaintiff addresses the four policy factors considered by the
Fifth Circuit in Marchesani v. Pellerin-Minor Corp.
in its choice of law analysis with respect to tort
claims.[31]Plaintiff asserts each factor favors
application of Louisiana law in the present
case.[32] Last, Plaintiff asserts that even if
Georgia law applies, Georgia law does not bar her from
recovery under the policy. Plaintiff contends that although
she executed a release, it was limited and specifically
reserved her right to make UM claims.[33]

III.
Legal Standard

Summary
judgment is appropriate when the pleadings, the discovery,
and any affidavits show that “there is no genuine
dispute as to any material fact and the movant is entitled to
judgment as a matter of law.”[34] When assessing whether a
dispute as to any material fact exists, the court considers
“all of the evidence in the record but refrains from
making credibility determinations or weighing the
evidence.”[35] All reasonable inferences are drawn in
favor of the nonmoving party, but “unsupported
allegations or affidavits setting forth ‘ultimate or
conclusory facts and conclusions of law' are insufficient
to either support or defeat a motion for summary
judgment.”[36]If the record, as a whole, “could
not lead a rational trier of fact to find for the non-moving
party, ” then no genuine issue of fact exists and the
moving party is entitled to judgment as a matter of
law.[37] The nonmoving party may not rest upon
the pleadings, but must identify specific facts in the record
and articulate the precise manner in which that evidence
establishes a genuine issue for trial.[38]

The
party seeking summary judgment always bears the initial
responsibility of informing the Court of the basis for its
motion and identifying those portions of the record that it
believes demonstrate the absence of a genuine issue of
material fact.[39] Thereafter, the nonmoving party should
“identify specific evidence in the record, and
articulate” precisely how that evidence supports his
claims.[40] To withstand a motion for summary
judgment, the nonmoving party must show that there is a
genuine issue for trial by presenting evidence of specific
facts.[41] The nonmovant's burden of
demonstrating a genuine issue of material fact is not
satisfied merely by creating “some metaphysical doubt
as to the material facts, ” “by conclusory
allegations, ” by “unsubstantiated assertions,
” or “by only a scintilla of
evidence.”[42] Rather, a factual dispute precludes a
grant of summary judgment only if the evidence is sufficient
to permit a reasonable trier of fact to find for the
nonmoving party.

IV.
Analysis

A.
Whether the Choice of Law Provision in the Policy
Applies

GEICO
asserts that Georgia law applies to the instant dispute
because of a choice of law provision contained in the
policy.[43] In opposition, Plaintiff asserts that
the instant case requires a conflicts of law analysis for
delictual and quasi-delictual obligations, as opposed to
conventional obligations.[44] Moreover, Plaintiff asserts
that applying Georgia law would prevent Plaintiff from making
a full recovery, which is the “stated purpose of
Louisiana's uninsured/underinsured
legislation.”[45]

When
sitting in diversity, a district court applies the choice of
law rules of the state in which it sits.[46] Louisiana law
“generally gives contracting parties the freedom to
choose which state's law will govern disputes arising out
of the contract.”[47] Pursuant to Article 3540 of the
Louisiana Civil Code, contractual choice of law provisions
are presumed valid unless the “chosen” law
contravenes the public policy of the state whose law would
apply absent the choice of law provision-here,
Louisiana.[48] The Fifth Circuit has explained,
“One state's law does not violate another
state's public policy merely because the laws of the two
states differ.”[49] The Fifth Circuit has also
highlighted the official comments to Article 3540, which
state “only strongly held beliefs of a particular state
qualify for the characterization of ‘public
policy.'”[50]

The
party who seeks to invalidate a contractual choice of law
provision bears the burden of proving either that the
provision is invalid or that the application of the
“chosen” law would violate Louisiana's public
policy.[51] If a contractual choice of law provision
is valid and does not contravene Louisiana's strongly
held public policy, the court must still determine whether
the dispute falls within the scope of the
clause.[52]

Here,
the policy's choice of law provision states, “The
policy and any amendment(s) and endorsement(s) are to be
interpreted pursuant to the laws of
Georgia.”[53] Although Plaintiff asserts that the
choice of law provision is not applicable because the law of
delictual and quasi-delictual obligations applies to the
instant choice of law analysis, the Fifth Circuit instructs
district courts to apply the law of conventional obligations
when addressing conflicts of law in the context of an UM
coverage dispute.[54] Therefore, the law of conventional
obligations, which includes Article 3540, governs the instant
dispute.

While
Plaintiff does not expressly assert that the choice of law
provision is unenforceable because it violates Louisiana
public policy, [55] Plaintiff does assert that the
application of Louisiana law is necessary to prevent GEICO
“from arbitrarily denying this claim” and would
promote the stated purpose of Louisiana's UM legislation
of providing “full recovery for innocent accident
victims.”[56] However, in Champagne v. Ward,
the Louisiana Supreme Court, after conducting a conflict of
law analysis, applied Mississippi law in a UM coverage case,
even though Mississippi law left no redress for a
plaintiff's injuries.[57] Thus, Plaintiff fails to meet
her burden of showing that the clause would contravene
Louisiana's public policy.

Last,
the Court must determine whether the instant dispute falls
within the scope of the choice of law provision. Plaintiff
does not assert that the choice of law provision is limited
in any manner that would restrict the clause's
application. Further, the dispute concerns an interpretation
of the policy's coverage, and the choice of law provision
expressly states that Georgia law would govern the
interpretation of the policy. Because Plaintiff has failed to
meet her burden in proving that the choice of law provision
as contained in the policy is invalid or violates
Louisiana's public policy, Georgia law governs this
dispute.

B.
If the Choice of Law Provision Did Not Apply, Whether Georgia
or Louisiana Law Applies to the Present Case

Alternatively,
even if the choice of law provision does not apply, GEICO
asserts that Georgia law would still apply pursuant to
Louisiana Civil Code Article 3515 and Article 3537, which
control a conflicts of law analysis regarding conventional
obligations. As stated above, Louisiana's choice of laws
rules apply to the present case because the Court is sitting
in diversity. In Champagne v. Ward, which has been
adopted by the Fifth Circuit, [58] the Louisiana Supreme Court
set forth the proper choice of law analysis for automobile
accident cases that involve parties and
underinsured/uninsured motorist insurance policies from
states other than Louisiana.[59] The court held that if
Louisiana law differs from the law of a foreign state, a
determination as to the governing law must be made in
accordance with the Louisiana Civil Code's conflict of
laws principles.[60]

Thus,
according to Champagne, the Court must first
determine whether the UM law of Louisiana and Georgia
differ.[61] The Louisiana Supreme Court has
determined that an accident victim does not forfeit any right
against his UM carrier by releasing the tortfeasor, who
allegedly caused the accident.[62] In contrast, in Georgia,
“[a] claimant who executes a general release of the
tortfeasor cannot recover UM benefits, because UM claims
‘are derivative in nature, requiring the injured party
to establish the legal liability of the uninsured or
underinsured motorist, which he or she cannot do if he or she
has released that motorist from
liability.'”[63] Consequently, because the applicable
law of the two states differs, the Court must conduct a
conflict of laws analysis in accordance with the Civil
Code.[64]

The
Fifth Circuit has applied Louisiana Civil Code Article 3515
and Article 3537 when conducting a conflict of laws analysis
regarding UM coverage. “Article 3515 states that when a
case involves contacts with other states, the applicable law
is that ‘of the state whose policies would be most
seriously impaired if its law were not applied to that
issue.'”[65] Under Article 3515, the factors used to
determine which state's policies would be most seriously
impaired are: “(1) the relationship of each state to
the parties and the dispute; and (2) the policies and needs
of the interstate and international systems, including the
policies of upholding the justified expectations of parties
and of minimizing the adverse consequences that might follow
from subjecting a party to the law of more than one
state.”[66]

Article
3537, which is intended to be read in conjunction with
Article 3515, [67] also enumerates a list of factual
contacts to determine which state's policies would be
most impaired by the failure to apply its law. Article 3537
governs conflict of laws for conventional obligations and
provides,

that state is determined by evaluating the strength and
pertinence of the relevant policies of the involved states in
the light of: (1) the pertinent contacts of each state to the
parties and the transaction, including the place of
negotiation, formation, and performance of the contract, the
location of the object of the contract, and the place of
domicile, habitual residence, or business of the parties; (2)
the nature, type, and purpose of the contract; and (3) the
policies referred to in Article 3515, as well as the policies
of facilitating the orderly planning of transactions, of
promoting multistate commercial intercourse, and of
protecting one party from undue imposition by the other.

The
Fifth Circuit has stated that “applying
[Louisiana's choice of law] principles, Louisiana courts
generally choose the law of the state in which the insurance
policy in question was issued to govern the interpretation of
the terms of the policy.”[68] Moreover, while a
plaintiff's residence is a factor to be considered in
making the choice of law determination, it is not
determinative.[69]

In
Abraham v. State Farm, the Fifth Circuit analyzed a
similar situation as the instant case, as a plaintiff was
driving his vehicle in Baton Rouge, Louisiana, when an
uninsured defendant's vehicle collided with his
vehicle.[70] The Fifth Circuit reversed the district
court's determination that Louisiana law applied to the
case finding instead that Mississippi law should govern,
which foreclosed the plaintiff's ability to recover a
statutory penalty and attorney's fees for bad faith,
applied to the subsequent UM coverage dispute.[71] In that case,
considering the place of domicile or habitual residence of
the plaintiff, the trial court determined that plaintiff was
a resident of both Mississippi and Louisiana after evaluating
a number of facts.[72] Specifically, the Fifth Circuit noted
that the trial court considered: 1) the plaintiff spent part
of his year at his residence in Mississippi; 2) he spent part
of the year living with his daughter in Louisiana; 3) he
holds a Louisiana driver's license; and 4) he is
domiciled in Mississippi.[73] Moreover, in terms of the
location of the negotiation, the formation, and the object of
the contract, the plaintiff's insurance policy was issued
in Mississippi, and his car was registered in
Mississippi.[74] Considering these facts, the Fifth
Circuit held that Mississippi law controlled because
“public policy interest in the uniform application of
its insurance laws” outweighed Louisiana's
competing interests.[75] Therefore, the Fifth Circuit reversed
the district court's determination to apply Louisiana
law, and because the parties conceded that Mississippi law
did not require a tender payment by an insurance provider,
the Fifth Circuit rendered judgment for the insurance
company.[76]

In
terms of the place of negotiation and formation of the
transaction, the insurance policy at issue here was
negotiated and formed in Georgia. Moreover, the policy was
issued in Georgia, and, as stated above, “Louisiana
courts generally choose the law of the state in which the
insurance policy in question was issued . . .
.”[77] Considering the place of domicile and
habitual residence of the Plaintiff, which is not
determinative, Plaintiff lived in Louisiana at the time of
the accident as a student at LSU, but she also was a Georgia
native who returned to Georgia shortly after the accident. As
to the place of performance of the contract and the location
of the object of the contract, the payments for the policy
were made in Georgia by Georgia residents for the purpose of
insuring cars that were garaged in Georgia. In upholding the
justified expectations of the parties and facilitating the
orderly planning of transactions, “[P]laintiff's
premium for UM coverage was based on the application of
[Georgia] law to the contract.”[78] Applying
Louisiana law to the insurance policy “would result in
the abrogation of a [Georgia] contract, ” considering
that the UM laws of Louisiana and Georgia differ and the
contract was formed in Georgia.[79] Thus, similar to
Abraham, despite the fact that Plaintiff's
accident occurred in Louisiana where she asserts she was
living at the time, Georgia's “public policy
interest in the uniform application of its insurance
laws” outweighs Louisiana's competing interests.
Consequently, regardless of the policy's choice of law
provision, Georgia law applies to the instant case.

C.
Whether Plaintiff Executed a General or Limited
Release

Plaintiff
asserts that she did not execute a general release, but
rather executed a limited release, which retained her right
to bring the UM claims. When interpreting a release, the
Court of Appeals of Georgia has provided,

A release or settlement agreement is a contract subject to
construction by the Court. It is governed by state law
applicable to contracts in general. The cardinal rule of
construction is to determine the intention of the parties.
Where the terms of a written contract are clear and
unambiguous, the [C]ourt will look to the contract alone to
find the intention of the parties. Such a contract is the
only evidence of what the parties intended and understood by
it.[80]

Moreover,
Section 33-24-41.1 of the Code of Georgia sets forth that a
limited release shall:

(1) Release the settling carrier from all liability from any
claims of the claimant or claimants based on injuries to such
claimant or claimants; and (2) Release the insured
tort-feasor covered by the policy of the settling carrier
from all personal liability from any and all claims arising
from the occurrence on which the claim is based except to the
extent other insurance coverage is available which covers
such claim or claims.

Finally,
a limited release can only be effective if the liability
insurer of the tortfeasor exhausts its policy
limits.[81]

Both
parties cite Rodgers v. St. Paul Fire & Marine
Insurance Co.[82] There, a plaintiff filed a claim against
his UM carrier for wrongfully denying him UM
benefits.[83] The Georgia Court of Appeals stated that
an “injured party who executes . . . a limited release
may still proceed to judgment against the tortfeasor [and]
merely limits the tortfeasor's personal liability to the
amount of available insurance coverage.”[84] In
Rodgers, prior to executing a release, the plaintiff
stated his intention to release his claims against the
tortfeasor “pursuant to the provisions of [the Code of
Georgia] § 33-24-41.1” in order to pursue his
claim against his UM carrier.[85] However, the plaintiff then
executed a complete release without reserving any rights or
restricting the scope of the release.[86] As a result,
the Court of Appeals of Georgia determined that the trial
court did not err in granting summary judgment for the UM
carrier because the plaintiff's executed general release
of the tortfeasor extinguished his derivative liability claim
against the UM carrier.[87]

In the
instant case, Plaintiff's release states that:

the undersigned hereby releases and forever discharges Andrew
and David Barback & State Farm Insurance companies . . .
from any and all claims, demands, damages, actions, causes of
action or suits of any kind or nature whatsoever, and
particularly on account of all injuries . . . which have
resulted or may in the future develop from an accident which
occurred on or about May 23, 2016 . . . .

Plaintiff
then added language to the release: “Releaser hereby
reserves right to make claim [f]or uninsured/underinsured
motorist to the extent that any coverage is [f]ound to be
available and applicable to the releaser. The present release
in no way waives right of releaser to make such claim with
the applicable party or parties.”

As in
Rodgers, Plaintiff asserts that she intended to
execute a limited release. Additionally, as noted in
Rodgers, Plaintiff's reservation does not
explicitly limit the tortfeasor's personal liability to
the amount of available insurance coverage.[88] However,
unlike in Rodgers, Plaintiff included a reservation
that indicates Plaintiff's intention to retain her UM
claims in her release of the tortfeasor. Therefore, the
instant case is distinguishable from Rodgers because
Plaintiff expressed her intention in the executed release.

Moreover,
in Cook v. State Farm Mutual Auto Insurance Co.,
another Georgia Court of Appeals case, a plaintiff-insured
also brought a claim against a defendant-insurer for denying
his claim for UM coverage.[89] The court notes that the
plaintiff intended to settle with the tortfeasor and the
tortfeasor's insurer and then pursue UM coverage under
his policy.[90] The plaintiff executed a release stating
that he discharged the tortfeasors and their insurance
companies from any and all claims, but the plaintiff struck a
clause in the release applying the release to “any and
all other persons, firms and
corporations.”[91] As a result, the plaintiff asserted that
he preserved his rights against UM insurance
carriers.[92] However, the court determined that the
plaintiff did not retain his rights against the UM insurance
carriers because he released all claims against the
tortfeasors without reservation.[93] The court reasoned that
despite striking a section of the release, the plaintiff
“failed to take those steps which would have indicated,
without equivocation, that his release of [the tortfeasors]
was intended to allow him to retain his right to sue the
insurers on their derivative liability.[94]

As
stated in Cook, Plaintiff's reservation does not
expressly “retain [her] right to sue [GEICO] on [its]
derivative liability.”[95] However, unlike in
Cook, Plaintiff's reservation is not limited to
“persons, firms and corporations” other than the
tortfeasor. Instead, Plaintiff's reservation generally
applies to her ability to make any UM claim. Therefore, the
instant case is also distinguishable from Cook.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Finally,
in Kent v. State Farm Mutual Auto Insurance Co.,
plaintiffs brought an action alleging that their UM carrier
wrongfully denied their claim for coverage following an
accident.[96]Plaintiffs asserted that because they
executed a limited release and settled a claim against the
tortfeasor, they retained their right to make a claim against
their UM carriers.[97] However, upon executing the limited
release, the plaintiffs voluntarily dismissed the tortfeasor
with prejudice, so the plaintiffs were prevented from
securing a judgment against the ...

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